Cybersecurity Regulatory Compliance
Firms are facing unprecedented times due to the impact of regulatory change on both compliance teams and business operations. New regulations, increased enforcement, and enhanced data analytics by supervisors are putting intense pressure on firms. Meanwhile, rising compliance costs are eating into the funds required for business investments. It is becoming clear that firms can no longer tackle regulatory compliance in financial services the way they have been. A change of approach is needed.
To meet these challenges successfully, financial services compliance teams need to embrace digital transformation, which involves using technology, people, and processes to fundamentally change how an organization delivers value. The return on investment of digital transformation should include enhancing customer relationships and improving operational efficiency.
It is true that compliance teams feel left out of their organization's digital transformation programs – that it is not for them or that it has passed them by. The advent of regulatory technology (RegTech ) creates an opportunity for compliance teams to engage in digital transformation and improve how technology, people, and processes deliver the right compliance outcomes. Furthermore, compliance teams that engage with digital transformation in the right way have the opportunity to accelerate their organization's overall transformation program.
Visit our Banking page
Top Mistakes to Avoid in Cybersecurity Regulatory Compliance
Cyber-resilience has become embedded in the wider concept of operational resilience, covering different types of operational disruptions in regulatory terms. The pace of changes in cybersecurity regulations is pushing up both cost and complexity for financial services firms.
According to UK Finance, a London-based financial services financial firm, one of its members received on an average 41 regulatory publications per week during 2019. Their investment in a regulatory change in the first eight months of 2019 represented 33-40% of its forecast annual business-as-usual investment budget. Some of this spending is focused on updating legacy systems. As companies move ahead in their cybersecurity regulatory compliance journey, they need to make sure they don't repeat common mistakes mentioned below:
- Trying to Solve the Compliance Problem by Adding More People
- Putting Scarce Security Talent to Work on Repetitive Compliance Tasks
- Not Upskilling Cyber Team in a World of Rising Threats
- Overburdening Cyber Team with Excessive Internal Compliance Requests
- Failing to Recognize that this is a Data Problem
- Not Reviewing and Rationalizing Cybersecurity Compliance Control Structure
#1 Trying to Solve the Compliance Problem by Adding More People
Cybersecurity is often presumed to be the responsibility of specialist security professionals, resulting in a false sense of security; excuse the pun. Adding more and more centralized security experts to handle cyber compliance allows the wider organization to not take ownership and responsibility. The real challenge is to bring cybersecurity into the mainstream and make it a part of HR policy. Cybersecurity should be central when planning, designing, and deploying new IT systems and not be given attention only at the end of such projects.
Oliver Wyman estimates that between 10% and 15% of financial services employees are now dedicated to compliance and risk management. A global shortage of financial services compliance talent across the industry means that remuneration costs are rising too, even as firms continue to struggle to fill essential roles. Automating the entire cybersecurity compliance value chain can significantly bring efficiencies into the system and release cost burdens of companies in the long run.
#2 Putting Scarce Security Talent to Work on Repetitive Compliance Tasks
Regulatory change is happening at such volume and so quickly that teams feel part of an intense marathon. There are too many projects, a scarcity of resources, and a high number of critical issues that need immediate resolution.
According to a cybersecurity workforce study commissioned by (ISC)2 in 2021, there’s a huge demand-supply gap of 359,000 cybersecurity professionas in the United States. The gap widens 9X at a global level with about three million professionals.
On average, cybersecurity roles take 21% longer to fill than other IT jobs. The deployment of AI in combination with other automation can decrease many manual tasks, making employees free of mundane tasks and focusing on other value-added tasks that need human intelligence. Tackling the issues created by regulatory change through digital transformation opens possibilities for regulatory compliance in financial services to deliver value to the business in new ways.